Imperial Life in the Emerald City

by Rajiv Chandrasekaran

  The CPA’s economic team had no shortage of ambition. They began studying the feasibility of giving each family a debit card loaded with the cash value of all the rations they were due. The cards would be automatically replenished each month. Otwell was aghast. Nobody in Iraq used credit cards. There were no automated teller machines. Phone service and electrical power were unavailable for much of the day. How did the CPA expect merchants to process debit cards? Who would purchase the processing equipment? To Otwell, it was another crazy ivory-tower scheme invented in the Emerald City.

  Bremer was unmoved by Otwell’s warnings. Monetization made sense, he decided, and it would be enacted by June 1—thirty days before the handover of sovereignty. But Otwell didn’t back down. He sought out senior members of the British contingent in the CPA. They were receptive to his concerns and began lobbying Bremer and the American military. In the end, it was the U.S. military command that shot down the plan. The troops were already stretched thin fighting the insurgency. They couldn’t handle food riots, too. If changing the ration system wasn’t a prerequisite for relinquishing power, it didn’t need to happen. Members of the economic team saw it differently: a little pain now would prevent bigger problems in the future. But expectations had changed. What was best for Iraq was no longer the standard. What was best for Washington was the new calculus.

  A few weeks after he arrived in Baghdad, twenty-four-year-old Jay Hallen realized he’d never meet his goal of reopening the stock exchange by December 31. He had become infected with the same pre–November 15 ambition, as had almost everyone else in the palace. Hallen had decided to build what he called “a whole new stock exchange from the ground up,” with a computerized trading system, a board of directors, a securities and exchange commission, licensed brokers, and a revised financial markets law. Despite American enthusiasm for the plan, Iraqis had cringed. Their top priority was reopening the exchange, not setting up computers or enacting a new securities law. Brokers and traders wanted to go back to work. Investors wanted to buy and sell. “People are broke and bewildered,” broker Talib Tabatabai had told Hallen. “Why do you want to create enemies? Let us open the way we were.”

  Tabatabai, who held a doctorate in political science from Florida State University, believed that Hallen’s plan was unrealistic. “It was something so fancy, so great, that it couldn’t be accomplished,” he said. “But he didn’t listen to us.”

  Hallen was convinced that major changes had to be enacted. “[Iraqi] laws and regulations were completely out of step with the modern world,” he said later. “There was just no transparency in anything. It was more of a place for Saddam and his friends to buy up private companies that they otherwise didn’t have a stake in.”

  Hallen turned to the Financial Services Volunteer Corps, a nonprofit American organization that helps build stock markets in developing nations. The FSVC, comprising government and private-sector specialists, agreed to send a six-person delegation to Baghdad in November to meet with Hallen and a group of Iraqis. At the meeting, which was relocated to Jordan after the attack on the al-Rasheed Hotel, the American volunteers agreed to help Hallen with his to-do list. One of the participants took up the task of rewriting the securities law. Others offered assistance with training brokers and purchasing computers.

  As the law was being written, Hallen began firing Iraqis. The old stock exchange employed eighty-five people—far more than he needed for the new, computerized exchange. Instead of keeping all of the former employees, as other CPA staffers had done with the government agencies they supervised, Hallen was determined to create a lean, American-style exchange with just forty salaried positions. He met with each of the old employees and then chose forty-five to sack. “It definitely ruffled feathers,” he said. “It was not an easy time, because people in Iraq are not used to getting fired.”

  Hallen nominated nine Iraqis to serve on the exchange’s board of governors. To ensure the board’s independence, he needed to find at least four who would not be involved in the exchange’s day-to-day operations, but he didn’t know many Iraqi businessmen beyond those involved with the stock market. For recommendations he turned to two Iraqis he trusted. As he met candidates, he screened them for proficiency in English—he later said that this was for his personal benefit—and for “a very American style of thinking in terms of business and capitalism.”

  He eventually assembled what he thought was an outstanding group, until an Iraqi friend told Hallen he was making “a big mistake.” Most of the candidates Hallen had selected were Sunni Arabs. It was an understandable oversight—most of the wealth and business expertise in the old days was in the Sunni community—but even so, Shiite and Kurdish leaders were bound to be upset. Hallen struck a few Sunni names from the list.

  Opening the exchange also required money to buy the computers, to fund the construction of a trading floor, to lease a building, and getting money meant Hallen had to compete against other CPA staffers and their pet projects. “Some could argue that the country had so many needs, like electricity and security, so who cares about the stock exchange?” But Hallen believed that his project was just as deserving. He began to lobby his boss, and everyone else involved in disbursing funds, to pay for the exchange. In the end, he got the money he needed.

  By the spring of 2004, the securities law was ready. It had been vetted by the CPA’s lawyers and several cabinet agencies in Washington. On April 19, Bremer signed it, and simultaneously appointed the nine Iraqis selected by Hallen to become the exchange’s board of governors. Another five Iraqis were named to the new Securities and Exchange Commission.

  The stock exchange’s board selected Talib Tabatabai, the American-educated broker who had been so critical of Hallen, as its chairman. The new securities law that Hallen had nursed into life gave the board control over the stock exchange’s operations, but it didn’t say a thing about the role of the CPA adviser. Hallen assumed that he’d have a part in decision making until the handover of sovereignty. Tabatabai and the board, however, saw themselves in charge.

  The board hired back the forty-five workers whom Hallen had fired. The stock exchange didn’t need more employees, but it didn’t make sense to create enemies of fellow Iraqis. Who knew what a pink-slipped worker might do?

  Tabatabai and the other governors also decided to open the market as soon as possible. They didn’t want to wait several more months for the computerized trading system to be up and running. They ordered dozens of DryErase boards to be installed on the trading floor. They had used blackboards to keep track of buying and selling prices before the war, and that’s how they’d do it again.

  Tension between Hallen and the board grew. Hallen regarded the board as “stubborn and resistant to change.” Board members couldn’t understand why Hallen wouldn’t leave them alone. It was their country, after all. The board balked at paying bills for services ordered by Hallen that they felt were unneeded; Hallen believed that the board was refusing perfectly reasonable expenses, such as guards to prevent squatters from occupying the stock exchange. “It was not a pleasant business,” Hallen said.

  On June 22, Hallen left Iraq. Two days later, the stock exchange opened. Brokers barked orders to floor traders, who used their trusty whiteboards. Transactions were recorded not with computers but with small chits written on in ink. CPA staffers stayed away, afraid that their presence would make the stock market a target for insurgents.

  When he returned to the United States, Hallen told an interviewer from the Association for Diplomatic Studies and Training that his work in Iraq “was not the crowning achievement of my career.”

  “When I think about how I felt when I left, I was unhappy,” he said. “But when I look back on it… and put it in perspective and look at everything I was up against, I feel differently. I was by myself for five months in a nearly impossible situation. At times it really felt impossible, trying to pull everything together. When I look at how things are, I feel very proud because I knew I was instrumental
in bringing things to where they are today, even if things didn’t turn out the way I wanted them to. If I hadn’t done my job, maybe nothing would’ve happened at all.”

  I asked Tabatabai what would have happened if Hallen hadn’t been assigned to reopen the stock exchange. He smiled. “We would have opened months earlier. He had grand ideas, but those ideas did not materialize,” Tabatabai said of Hallen. “Those CPA people reminded me of Lawrence of Arabia.”

  But even T. E. Lawrence had known when to back down. As Tabatabai spoke, I thought of one of Lawrence’s most apropos quotations, and wondered if anyone in the palace had bothered to read him:

  Do not try to do too much with your own hands. Better the Arabs do it tolerably than that you do it perfectly. It is their war, and you are to help them, not to win it for them. Actually, also, under the very odd conditions of Arabia, your practical work will not be as good as, perhaps, you think it is.

  THE GREEN ZONE, SCENE X

  American military personnel stationed in the Republican Palace rarely had a kind word to say about the CPA. The soldiers, many of whom were majors and colonels, had been in uniform for more than two decades and resented being ordered around by CPA staffers in their twenties. Some of the soldiers had done tours in Kosovo, Haiti, and Somalia, and a few had even served in Vietnam. They knew a thing or two about post-conflict nation building. But to the CPA’s young turks, the soldiers were drivers, guards, and errand boys. The civilians made policy; the soldiers implemented it.

  Since the soldiers weren’t supposed to drink, they didn’t hang out at the bars or the al-Rasheed’s disco. They kept to themselves, smoking in the rear portico, exercising in the gym, and playing cards in their trailers. They maintained that things would be a whole lot better if they were in charge. The acronym CPA, they joked, stood for Can’t Produce Anything.

  In early 2004, a contingent of marines was assigned to guard the palace. They erected concrete barriers to limit traffic around the compound and strung new coils of razor wire atop the blast walls. They set up more observation posts and established a sign-in table, where those without plastic CPA badges had to hand over a piece of identification in exchange for a visitor’s pass, which had to be displayed at all times while that person was on palace grounds.

  Behind the desk was a white DryErase board upon which the marines drew cartoons. One day the board depicted a gravestone inscribed with the words COMMON SENSE. Underneath was a caption: “Killed by the CPA.”

  13

  Missed Opportunities

  DRIVING ANYWHERE IN BAGHDAD before the war took about fifteen minutes. A network of wide expressways and boulevards crisscrossed the city. Motorists could zip along at the speed limit or faster. Everyone stayed in his lane and stopped at red lights. Traffic policemen—in white shirts, white hats, and white gloves—manned busy intersections. The traffic was light because the importation of cars was restricted. If an Iraqi wanted a car, he put his name on a list at the Ministry of Trade. If he was lucky, he’d get a letter five years later informing him that a car was ready for purchase—at a subsidized price. Perhaps it would be a Toyota, a Volkswagen, or a Russian Lada. He took what he could get. Of course, the car everyone wanted was a Chevy Caprice, or any American-made, eight-cylinder gas-guzzler. Saddam hated Washington, but the Iraqis loved Detroit.

  After the war, the most noticeable change in Iraqi life was the traffic. The stoplights went out. People started driving on the wrong side of the road, secure in the knowledge that cops were no longer reporting for work. Cars barreled down sidewalks. People who always wanted to make a left turn in front of their house but couldn’t because of a concrete median simply hired construction workers to jackhammer away the obstruction.

  Lawlessness was only part of the problem. The American military closed off streets near its bases in the city, regardless of whether they were vital thoroughfares. To protect the Green Zone, the military shut down one of the bridges spanning the Tigris and two expressways connecting western and northern Baghdad with the city center. The sight of barricaded roads was a daily reminder to Iraqis that they were under occupation, and those barricades did more to stoke anger at the Americans than almost anything else.

  But the biggest problem had its roots in a well-intentioned CPA policy. Peter McPherson, Bremer’s economics czar, abolished duties on imports, including a tax on cars that could be as much as 100 percent of the cost of the vehicle. Within days, savvy entrepreneurs brought truckloads of used cars to Baghdad from as far away as Germany and the Netherlands, and Iraqis who had socked away money under their mattresses bought their first car, or, in many cases, a second car for the family. The CPA estimated that a half million cars were shipped into Iraq in the first nine months of the occupation, more than doubling the number of vehicles on the road. Iraqis were happy—until they had to get somewhere or fill up the tank. Yes, they were living atop the world’s second-largest oil reserves, but Iraq’s refineries could not produce enough gasoline to fuel all the new cars. Gas lines stretched for miles, prompting the CPA to pay Halliburton millions of dollars a day to truck in gasoline from Kuwait and Turkey. But even with gas in the tank, the volume of new cars on the roads made routine trips interminable.

  Iraqis weren’t the only ones grousing. American soldiers grew increasingly nervous about getting stuck in traffic. Although the traffic police had returned to their posts a few months into the occupation, the CPA forbade them to levy fines. The traffic cops had been notoriously corrupt, forcing motorists to fork over money instead of issuing them summonses to appear in court. The CPA was standing on principle, even if declawing the cops meant that traffic would continue to crawl.

  To Major General Martin Dempsey, the commander of the First Armored Division, the army unit in charge of Baghdad, the solution seemed clear. He decreed that a new traffic law be drawn up. The order trickled down the ranks to a captain named John Smathers, a personal-injury lawyer from Maryland.

  Smathers was a reservist attached to the military’s civil affairs team working with the CPA to administer Baghdad. He was forty-five, though he had the trim physique of a soldier a generation younger. The only giveaway was his graying hair and his intense, no-nonsense demeanor. He had already received three Bronze Stars for his service in Iraq. He fended off an ambush in southern Baghdad the day after the city’s liberation. Over the next few weeks, he and his quick-reaction team captured two of the fifty-five Iraqis most wanted by the Pentagon; foiled a bank robbery, recovering $6.3 million in cash; and found ten artifacts stolen from the Baghdad Museum.

  As a former county prosecutor, Smathers knew a fair bit about traffic laws. His first step was to read a translated copy of Iraq’s code. After poring through it, he judged it a disaster. Traffic officers could seize a driver’s car without a judge’s permission. They could collect fines on the spot. They could jail a driver for two years for simply uttering an insult. “There was no definition of what powers the police had, other than whatever they wanted,” Smathers said.

  With the help of an Iraqi judge he befriended, Smathers began rewriting the law. It took him three weeks. His finished draft was fifty-three pages long, more than twice the length of the original law, and it embodied all of the earnest intentions and parochial biases of the American occupation. He limited officers to issuing tickets payable at a courthouse. As collateral, they could seize a driver’s license. If drivers wanted to dispute citations, they could do so at new traffic courts established under the law.

  To Smathers, the old law was riddled with sloppy definitions and loopholes. Since he didn’t know enough about traffic law to rewrite those sections himself, he logged on to the Internet and searched for a document to serve as his model, a document he knew well: the State of Maryland’s motor vehicle code. After reading the Maryland law, he engaged in a flurry of cutting and pasting. The Iraqi law, he noticed, didn’t have a ban on following another vehicle too closely. Section 21-310 of the Maryland code had just the wording he needed. It became Article 18, P
aragraph 11, of his draft: “The driver of a motor vehicle may not follow another vehicle more closely than is reasonable and prudent, having due regard for the speed of the other vehicle and of the traffic on and the condition of the highway.” He did the same borrowing for regulations on speeding, unsafe lane changes, and the failure to yield. If it was good enough for Baltimore, it was good enough for Baghdad.

  As he went about drafting the code, the personal-injury lawyer in Smathers seized upon the fact that the original law had no provision for people to sue the police for misbehavior. He saw this as a glaring omission. He opened his laptop and typed out a paragraph:

  If a police officer, acting within the scope of his duties as an employee of the Ministry of Interior, uses excessive force to make an arrest and causes personal injury to another or unnecessarily damages the property of another, then the injured person or owner of damaged property has a civil cause of action against the Ministry of Interior, in civil court, to recover compensatory damages for (1) the value of medical services rendered; (2) lost wages; (3) pain and suffering; and (4) the lesser of the cost of repair of damaged property or the value of the property. If the police officer acted intentionally and with malice, then the person may also recover punitive damages.

  Smathers regarded his crafting of the new law as a model of an enlightened occupation. He had consulted with an Iraqi judge and had stuck to the general framework of Iraq’s old law, but he had added the necessary safeguards against abuses of power. He proudly carried the document to the Republican Palace and gave it to the team of CPA staffers working with Iraq’s Ministry of Justice. They were to vet the proposed law before it was sent to Bremer’s office for final approval.